A new provision has been inserted in the Income Tax Act with effect from fiscal year 2019-20, which allows any domestic company an option to pay income tax at the rate of 22%(subject to condition). Moreover, local companies incorporated after October 2019 will pay tax at 15%.

To promote growth and investments in the country, Union Finance Minister Nirmala Sitharaman on Friday announced to slash the corporate tax rates for domestic companies and stated that a new provision has been inserted in the Income Tax Act with effect from fiscal year 2019-20.

“We today propose to slash the corporate tax rates for domestic companies and also for new domestic manufacturing companies,” Sitharaman told media here.

“A new provision has been inserted in the Income Tax Act with effect from fiscal year 2019-20, which allows any domestic company an option to pay income tax at the rate of 22 per cent subject to condition that they will not avail any exemptions or incentive,” she said.

She went on to highlight that “such companies shall not be required to pay any minimum alternative tax.”

Moreover, to attract investment in manufacturing, local companies incorporated after October 2019 will pay tax at 15 per cent, Sitharaman said.

Sitharaman stated that corporate tax rate will be 22 per cent without exemptions, inclusive of surcharge and cess. “No Minimum Alternate Tax (MAT) applicable on such companies,” she said.